Franklin FTSE India ETF

FLIN

Market cap $2.53B

MCHI, with over $7B in AUM, covers around 550 Chinese stocks, most of which are giant-caps and come in varied share classes. We highlight who MCHI would be best suited for. There are some key risks associated with this ETF that investors should be aware of.

India's strong economic growth and financial sector reforms support a bullish long-term outlook, but FLIN's high valuation tempers enthusiasm. Franklin FTSE India ETF is well-diversified across financials, consumer, industrials, and infrastructure, but its performance consistently lags the INDA ETF. Despite a low expense ratio and some yield, FLIN's poor index tracking, higher risk, and lower returns make it less attractive than peers.

Among APAC equity markets, Australia has a higher beta to oil prices while India, Indonesia and Thailand have lower betas. Domestic political uncertainties have been one main reason for the decoupling trend seen in Indonesia and Thailand.

Indian large-cap stocks are bouncing back after a deep selloff. Valuations are admittedly higher, but fundamentals have also turned for the better. Stay long FLIN ahead of a potentially catalyst-rich next few months.

FLIN, the cheapest Indian-focused ETF has underperformed global markets and emerging markets this year. India is still expected to grow at 2x the pace of the globe and substantially higher than other emerging markets. The RBI is currently in easing mode, with further cuts expected.

With trade wars wreaking havoc on the markets, investors and advisors are scrambling to pinpoint areas to place their geographic bets across the globe. Despite the temporary breather on “reciprocal” tariff policies, many expect more uncertainty ahead and are shying away from tariff-exposed regions.

India's stocks have erased most of this year's losses, thanks to early signs of increased government spending and monetary easing.

Despite the positive outlook, the new Trump administration is likely to adopt nationalist policies that could negatively impact India. The Indian market is expensive, with a P/E of 23x, suggesting a potential downside of 17%. Geopolitical risk and elevated valuation justify a sell recommendation for the ETF.

Franklin FTSE India ETF is tilted towards large-cap growth stocks, with 98% large-cap and 59% growth stocks, reflecting India's emerging market potential. FLIN has high exposure to cyclical sectors (47.3%), making it sensitive to economic cycles, but limited exposure to defensive sectors (16.9%) and technology (13.3%). FLIN has underperformed the S&P 500 since inception, partly due to currency fluctuations and limited technology exposure, but earnings growth is expected to accelerate in 2026.

Look at ETFs with exposure to India, as the growth outlook for the developing economy slows down, driven by internal and external headwinds.